What the message means, as any of the lunching laborers can tell you, is that the fuel-injection pump assemblers spent 98% of their work time on direct labor (rather than overhead) during the first half of their shift. If they keep it up, they become eligible for a sizable bonus under an SRC plan known as STP-GUTR, an acronym for "Stop the Praise -- Give Us the Raise." The electronic ticker tells them how they're doing.
"It's like the big red board at Caesars Palace," says Stack. "You know, the one with 10 or 15 games on it, for any sport you want to bet on. The odds are constantly changing, and the action is fantastic. Well, it's the same thing here. When you walk through this factory, you hear numbers everywhere you go. It's like you're in the middle of a bingo tournament."
SRC certainly does have more than its share of numbers. Those numbers guide its operational and financial reporting system, which is as elaborate, and as rigorous, as any in American business. What sets it apart is the level of employee involvement. Springfield's workers all play active roles in it; they are all directly responsible for helping to make it work.
The cafeteria ticker is part of that system, and -- like most of the other parts -- it is something Stack dreamed up as he went along. "I had no education," he says. "I had no master plan. My feelings were more basic. I just felt that, if you were going to spend a majority of your time doing a job, why couldn't you have fun at it? For me, fun was action, excitement, a good game. If there's one thing common to everybody, it's that we love to play a good game."
Gamesmanship lies at the heart of Stack's approach to management. Virtually everything that happens at SRC is based on the premise that business is essentially a game -- one, moreover, that almost anyone can learn to play. As with most games, however, people won't bother to learn it unless they "get" it. That means, first, they must understand the rules; second, they must receive enough information to let them follow the action; and third, they must have the opportunity to win or lose.
It is hard to exaggerate the lengths to which Stack has gone to get everyone at SRC involved in the Great Game of Business. For openers, he has set up an extraordinary education program, designed to teach employees how the Game is played. At one point, he even went so far as to have every worker in the plant take a series of courses covering most elements of a business curriculum, from accounting to warehousing.
More recently, the company has organized an ongoing management training program, aimed at opening up opportunities for employee advancement. At SRC, those opportunities are real. General foremen Steve Choate and Joe Loeber started out as janitors; director of safety and training Lee Shaefer began as a "gofer"; Wendall Wade, the 29-year-old supervisor of engine disassembly, was a shipping clerk. Inspired by such examples, some 80% of SRC's employees have taken courses under the program.
But promotion is just one of the possible rewards for playing the Game well, More important, perhaps, are those offered by the STP-GUTR bonus program. Here, too, the approach is unusual. Instead of funneling a predetermined percentage of profits into a bonus pool, as is common, SRC ties its bonuses to the achievement of specific goals. In fiscal 1985, for example, there were two such goals: to control costs (specifically, to reduce the plant's overhead charge-out rate from $39 to $32 per hour), and to increase operating income income from 6% to 15% of sales. Although the charge-out rate was eventually cut to $23 per hour, the company missed its operating income objective. As a result, employees received bonuses amounting to 7.8% of gross salary, rather than the 10% they would have earned had the company met both goals.
Additional rewards are offered to employees whose ideas improve the company's operations -- up to $500 per idea. Such programs are not uncommon in business, but SRC's works better than most. Thirty-two-year-old engine disassembler Freeman Tracy, for one, has turned in some 50 ideas, earning him $7,500 and saving the company almost $2 million in production costs -- and that's just since the buyout. Before, says Tracy, he "wasn't in a thinking mood, but now you know you're helping yourself as well as the company."
Then, of course, there is the long-term reward of stock accumulation. Stack had originally planned to offer direct ownership to everyone as part of the leveraged buyout, but he ran afoul of a Missouri state law that limits the number of owners in a privately held corporation. Instead, he set up the ESOP. "To me," Stack says, "giving ownership to the people who do the work has always seemed like the simplest way to run a business. It frees you to concentrate on productivity."
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If the education program teaches employees the rules of the game, and the compensation program allows them to participate in the risks and rewards, everything else is geared toward playing the Game as well as it can be played. Like any successful team in any sport, SRC concentrates on the fundamentals, on doing the thousand and one little things that separate a champion from an also-ran: turning the double play, hitting the cutoff man, covering the bag, advancing the runner. In the sport of remanufacturing, the fundamentals include such things as using hand tools correctly, watching the labor utilization rate, figuring out better ways to make spare parts. To a certain extent, SRC works on its fundamentals through its education program and its system of rewards. Mainly, however, SRC keeps employees focused on the basics by giving them all the information they need to follow the flow of the Game.
